Bank of America Says APAC Redefines Cross-Border Money Movement

Watch more: Need to Know With Bank of America’s Narendra Kumar Parhi

Cross-border payments in Asia-Pacific are being pulled toward the speed of the region’s domestic commerce, leaving companies in the United States to contend with payment systems that can move money around the clock while regulations, treasury practices and operating conventions remain divided by market.

APAC occupies a central position in global commerce. China, Vietnam, Malaysia, India and the Philippines are important links in global supply chains, while trade within Asia has also expanded, Narendra Kumar Parhi, managing director and head of Payments and Receivables Products, GPS APAC at Bank of America, told PYMNTS.

That commercial activity is meeting payment infrastructure that is already well established in many markets.

“The first thing the U.S. companies should recognize is that in APAC markets, real-time payments are no longer viewed as a premium capability,” Parhi said. “Whether they deal with consumers or partners or other corporates, real-time payments are a basic requirement in almost all APAC markets.”

The consequence for U.S. companies extends beyond adding another payment option. A company selling to consumers, paying suppliers or operating subsidiaries in the region must account for local expectations surrounding when money moves, when recipients know that it has arrived and what information travels with the transaction.

APAC, however, does not offer companies a single real-time network

“It is a collection of highly advanced, but very distinct payment markets,” Parhi said.

U.S. companies therefore need to evaluate “both the infrastructure and the payment capabilities, as well as the connectivity … along with the local regulatory framework and requirements,” he said.

Parhi pointed to bilateral and multilateral efforts, including Project Nexus, the China-Hong Kong connection and the India-Singapore connection.

The objective is straightforward, but the execution is not. Connecting domestic systems means preserving regulatory and compliance requirements that differ among jurisdictions even as the payment travels faster.

When the Payment Clock Disappears

For corporate treasury departments, the harder adjustment may occur after real-time payments have crossed the border.

“When we talk about real-time payments, and especially in the context of cross-border between APAC and the rest of the world, we are not only talking about facilitating payments within seconds or information exchange, but fundamentally how treasuries manage their cash positions,” Parhi said.

Traditional treasury operations rely on cutoffs. Companies reconcile accounts, calculate positions and make funding decisions around defined banking periods. An always-on payment environment weakens those conventions, particularly when transactions cross time zones between APAC and the U.S.

That creates practical questions around liquidity, funding and reconciliation. If a payment leaves Australia and reaches a U.S. account immediately, the parties still need to determine which operating day governs the transaction and how balances should be treated.

For U.S. companies, one potential benefit is greater certainty around settlement. Real-time payments can provide confirmation that money has settled while also improving the exchange of transaction information, Parhi said. In supply chains where companies are coordinating payments among suppliers, subsidiaries and counterparties across several markets, that visibility can reduce uncertainty surrounding the status of a transaction.

Technology may address part of the operational burden. Standardized payment data through ISO 20022 is one mechanism for improving information exchange among financial institutions and their customers, Parhi said. Artificial intelligence could automate portions of the documentation and exception processes that remain manual today.

For U.S. companies, APAC provides a working example of what happens when real-time payments move from an optional capability into the ordinary machinery of commerce. The remaining work sits at the borders between those systems, where speed must coexist with compliance, liquidity management and the practical requirements of moving money across jurisdictions.

Watch the full interview with Bank of America’s Narendra Kumar Parhi to learn more about:

• Why real-time payments have become a business requirement across much of APAC.
• How always-on settlement is changing liquidity management, reconciliation and treasury operations.
• How richer payment data and emerging technologies could improve visibility, efficiency and cross-border payments.

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